Gamestop stocks more volatile than Bitcoin- The Cryptonomist

The Gamestop (GME) stock is experiencing more volatility than Bitcoin. 

These days, the cryptocurrency queen seems to be caged in a sideways channel that fluctuates between $31,000 and $32,000. Meanwhile, on the NYSE, Gamestop is livening things up for investors. 

In just a few days, the company’s shares have surged. Yesterday alone, the stock gained 93.4% from $76 to $147, and today’s pre-market open indicates another 30% gain. 

In just one month, GameStop has seen its shares rise almost 700%. But what happened?

Some guys who hang out on a Reddit group, WallstreetBets, started betting heavily on GameStop’s rising stock. 

Melvin Capital, a hedge fund that had a basket of stocks it was aiming to sell short, found itself taking a loss on its hedge fund. In practice, a group of very young people brought a financial bigwig to its knees. 

Two companies stepped in to inject $2.75 billion into the hedge fund. This allowed Melvin Capital to sustain losses and close short positions on GameStop.  

Technically, what is called a short squeeze occurred, i.e. a sudden increase in price, at a time when investors had built up short positions. 

According to Cryptonomist trader Federico Izzi, the events that took place with Gamestop’s stock are destined to mark a turning point:

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All this happened just when GameStop was in the middle of a crisis, so much so that in recent days, due to the pandemic, it had announced the closure of over 200 outlets worldwide. 

GameStop is in fact a chain of video game shops. Like everyone else, it is dealing with the consequences of the Covid-19 pandemic. The stock market rally of recent days may save it. However, analysts note that too rapid a rise can lead to equally rapid falls. Those who are familiar with Bitcoin know something about this.